October 13, 2013

On Fox News Sunday this morning, former Senator Evan Bayh voiced his support for a proposal by Senator Susan Collins, Republican of Maine, to temporarily repeal the medical-device tax in exchange for temporary funding of the government and increasing the federal debt limit through January. Bayh told host Chris Wallace that Collin’s proposal doesn’t go far enough. “Clearly a permanent repeal would give more certainty to the business community,” said Bayh.

The “business community” Bayh referenced also happens to be huge clients of Bayh’s lobbying firm, a conflict of interest that was not disclosed during the discussion.

After leaving the Senate, Bayh became a partner at McGuireWoods, which represents Allied Medical Supply, the American Orthotic & Prosthetic Association, the Cook Group, Eleka Instruments and other medical-device interests.

When Democrats, including Bayh, passed the Affordable Care Act three years ago, they enacted a 2.3 percent excise tax on medical device companies to pay for the law. As Citizens for Tax Justice notes, many major medical-device companies pay no tax at all. For instance, medical product giant Baxter International had a 2008–10 average federal income tax rate of negative 7.1 percent, according to CTJ’s report.

The unraveling of the tax would increase the deficit by billions, a fact that runs counter to the GOP’s purported goal of reducing government red ink. Nevertheless, the fight to repeal the medical-device tax reveals how special interest groups have gamed the current political extremism in Washington for financial gain. As TheNation.com reported earlier this month, a letter demanding a repeal of the tax from seventy-five House Republicans was actually authored by a lobbying group for the medical-device industry.